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As Marissa Mayer Annoys Investors By Keeping $4.2B In Dividends

15 points by stevewillows 14y ago

mtgx 14y ago
I think this was the right move. The recovery and the long term sustainability of the company is much more important than helping some investors earn some money in the short term, while the company keeps becoming more irrelevant by the day. Look at Apple. They didn't even give dividends until they had $100 billion in cash. Marissa Mayer should use the money to put Yahoo back on a high-growth path, which would benefit everyone, including the investors.
deleted 14y ago
[deleted]
DanielRibeiro 14y ago
Related posts: The Dumbest Idea In The World: Maximizing Shareholder Value[1] and Does Business Short-Termism Require A Long-Term Stock Exchange?[2] [1] http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/ http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi... [2] http://www.forbes.com/sites/stevedenning/2012/07/03/does-business-short-termism-require-a-long-term-stock-exchange/ http://www.forbes.com/sites/stevedenning/2012/07/03/does-bus...
- jamesaguilar 14y ago
  Definite LOL on point one. The business should focus more on the needs of its customers than its owners? In what world does that make sense. I can see focusing on the customer rather than short term financial issues, but that doesn't seem to be what the article is advocating.
cbsmith 14y ago
This isn't copying Google. This is copying any tech company that is planning to grow and innovate.
- yen223 14y ago
  Apple comes to mind.
  - cbsmith 14y ago
    Fine. almost any tech company..
    - yen223 14y ago
      Sorry this wasn't clear, I actually meant Apple as an example of what you said. Apple under Steve Jobs famously refused to issue dividends in spite of shareholder pressure, instead choosing to reinvest most of the cash back into the company. This clearly turned out to be a great decision. Tim Cook's decision to start issuing dividends may well turn out to be the beginning of Apple's decline.
      - cbsmith 14y ago
        Honestly, Cook was between a rock and a hard place. They had a real hard time doing something with all that cash that justified holding on to it.
SeanDav 14y ago
Absolutely support this. Far too much attention is paid to quarterly returns rather than business strategy, with very short term views of profitability. I have some great war stories about this type of thinking. One of the best is Merrill Lynch firing almost their entire Bond trading desk because the market was quiet for a couple of months and the desk made a small loss. They did this just as the bond market turned and in rival companies the Bond desks went rapidly to rabid money making machines. Merrill Lynch had to scrabble to hire the people they just fired at vastly greater cost. This was literally a matter of weeks after firing them. This type of thinking is one of the main reasons Merrill Lynch does not exist any more as an independent entity. When you reward your traders and managers on short term results, you encourage short term risk taking. What do they care if the position they have taken will potentially blow up in 3 years time if there is a fundamental shift in conditions? All that matters is their current last few quarters make them look like heroes and they are going to get a fat bonus...
csense 14y ago
Yahoo is on the defensive here. There are two ways it can go: 1. Attack. Keep probing for new markets via acquisitions and new product development. Try to catch up to competitors by increasing investment in core competencies. 2. Retreat. Quit some markets by folding or selling business units. Focus resources selectively on core competencies. Return excess capital and sale proceeds to investors via dividends. I think the dividend warning is a signal that Mayer is planning on option #1. This is actually good news; most companies' stock value is much greater than their sale price. If Yahoo chose option #2, its decline would likely become irreversible as morale and reputation suffered due to the cuts, and investors would suffer enormous losses. With option #1, Yahoo has a decent chance of recapturing its former greatness, or at least stabilizing its position. The holding pattern Yahoo's been in since the early 2000's is the reason for its decline; it's time for them to either raise or fold.

15 points by stevewillows 14y ago

mtgx 14y ago

I think this was the right move. The recovery and the long term sustainability of the company is much more important than helping some investors earn some money in the short term, while the company keeps becoming more irrelevant by the day. Look at Apple. They didn't even give dividends until they had $100 billion in cash. Marissa Mayer should use the money to put Yahoo back on a high-growth path, which would benefit everyone, including the investors.

deleted 14y ago

[deleted]

DanielRibeiro 14y ago

Related posts: The Dumbest Idea In The World: Maximizing Shareholder Value[1] and Does Business Short-Termism Require A Long-Term Stock Exchange?[2] [1] http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/ http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi... [2] http://www.forbes.com/sites/stevedenning/2012/07/03/does-business-short-termism-require-a-long-term-stock-exchange/ http://www.forbes.com/sites/stevedenning/2012/07/03/does-bus...

jamesaguilar 14y ago
Definite LOL on point one. The business should focus more on the needs of its customers than its owners? In what world does that make sense. I can see focusing on the customer rather than short term financial issues, but that doesn't seem to be what the article is advocating.

cbsmith 14y ago

This isn't copying Google. This is copying any tech company that is planning to grow and innovate.

yen223 14y ago
Apple comes to mind.
- cbsmith 14y ago
  Fine. almost any tech company..
  - yen223 14y ago
    Sorry this wasn't clear, I actually meant Apple as an example of what you said. Apple under Steve Jobs famously refused to issue dividends in spite of shareholder pressure, instead choosing to reinvest most of the cash back into the company. This clearly turned out to be a great decision. Tim Cook's decision to start issuing dividends may well turn out to be the beginning of Apple's decline.
    - cbsmith 14y ago
      Honestly, Cook was between a rock and a hard place. They had a real hard time doing something with all that cash that justified holding on to it.

SeanDav 14y ago

Absolutely support this. Far too much attention is paid to quarterly returns rather than business strategy, with very short term views of profitability. I have some great war stories about this type of thinking. One of the best is Merrill Lynch firing almost their entire Bond trading desk because the market was quiet for a couple of months and the desk made a small loss. They did this just as the bond market turned and in rival companies the Bond desks went rapidly to rabid money making machines. Merrill Lynch had to scrabble to hire the people they just fired at vastly greater cost. This was literally a matter of weeks after firing them. This type of thinking is one of the main reasons Merrill Lynch does not exist any more as an independent entity. When you reward your traders and managers on short term results, you encourage short term risk taking. What do they care if the position they have taken will potentially blow up in 3 years time if there is a fundamental shift in conditions? All that matters is their current last few quarters make them look like heroes and they are going to get a fat bonus...

csense 14y ago

Yahoo is on the defensive here. There are two ways it can go: 1. Attack. Keep probing for new markets via acquisitions and new product development. Try to catch up to competitors by increasing investment in core competencies. 2. Retreat. Quit some markets by folding or selling business units. Focus resources selectively on core competencies. Return excess capital and sale proceeds to investors via dividends. I think the dividend warning is a signal that Mayer is planning on option #1. This is actually good news; most companies' stock value is much greater than their sale price. If Yahoo chose option #2, its decline would likely become irreversible as morale and reputation suffered due to the cuts, and investors would suffer enormous losses. With option #1, Yahoo has a decent chance of recapturing its former greatness, or at least stabilizing its position. The holding pattern Yahoo's been in since the early 2000's is the reason for its decline; it's time for them to either raise or fold.